Bitcoin experienced a significant sell-off linked to the unwinding of yen-funded carry trades, triggered by rapid movements in the USD/JPY exchange rate. On February 12, 2026, Japan's top currency diplomat, Atsushi Mimura, emphasized vigilance against FX volatility, prompting traders to reduce carry exposure. This led to cross-asset deleveraging, impacting Bitcoin through reduced liquidity and increased volatility. The yen's strengthening, coupled with official language signaling urgency, heightened intervention risk, causing traders to react swiftly. The yen's rapid appreciation to 153.02 per dollar from nearly 160 sparked speculation of intervention, influencing global risk conditions. As a result, Bitcoin, often treated as a high-beta asset, faced selling pressure as part of broader risk reduction across portfolios. The mechanism involves a chain reaction where increased FX volatility tightens margin requirements, forcing deleveraging across multiple asset classes, including Bitcoin. This highlights the interconnectedness of global financial systems, where changes in yen funding conditions can significantly impact crypto markets.